The first truth that strikes one about this book is historical: it was suppressed and then banned in Nazi Germany at the start of World War II. The freedom it espoused and substantiated as necessary for the establishment of a viable economy simply frightened the Third Reich. The second verity is subtle: a political and social balance-sometimes exquisite, sometimes casual, never static-is necessary for a free economy to exist.
     Achieving a free economy is not easy. As Wilhelm Ropke demonstrates in this volume, democratic governments often suffer from expansive and intrusive pseudo-melioristic impulses. These usually stem from one of several causes: righteous indignation, a Mother Theresa complex, "intellectual" arrogance, or just pure flights of economic fancy for which no basis can be found in reality but which offer very real political advantages. These inspirations always have some predictably negative effect on the free-market capitalism that supports overall societal success.
     As is evident in other chapters of First Principles, the devil of economic truth lies in the details. Ropke offers in Economics of the Free Society what a free economy should look like-warts and all. Although it is easy to explain where overweening government goes wrong-as Frederic Bastiat, Henry Hazlitt, and Milton Friedman do in their efforts (Chapters 7, 24, 25 respectively)-it is not as easy to describe just exactly what free-enterprise capitalism should look like. Ropke sets the standard.
     The lessons here are relatively simple, but like those of Ludwig von

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               The great risks implicit in an extreme dependence of all individuals in
               society upon each other are tolerable in the long run only where an
               efficiently administered legal system and an unwritten but generally
               accepted code of minimum moral precepts assure to the participants . . .
               that they will be able to carry on their activities in an atmosphere of
               mutual confidence and security. Economic history is a constant
               illustration of the truth that the intensity of economic activity rises or
               falls in the degree to which these conditions are fulfilled. [Emphasis added]

     We see here a reprise of Russell Kirk's narration of the history of morality in The Roots of American Order (Chapter 4). In that book, Kirk establishes that the unwritten rules of social
interaction, which are too many and too complex to codify, must persist within everyone's understanding for a society to function. If these rules are not uniformly assimilated there can be no faith in the system, nor can people trust one another's judgment or integrity, nor, ultimately, can there be any system at all. The two props upon which such an arrangement is founded are enlightened self-interest and the Golden Rule (referring here, in particular, to its practical application, not directly to its pan-religious significance). These must guide human behavior. The political ramification, if these understandings are present, is that government can be quite limited. The people will turn only sparingly to the legislature and will infrequently need to seek judicial recourse to settle disputes. Most citizens will be able to resolve their controversies informally or, better still, avoid them in the first place-because all are grounded in the same reality.
     After setting these moral foundations, so necessary for a free society to exist, Ropke proceeds with an investigation of the mechanisms

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               exactly as with internal trade it rests on the division of labor and on
               the exchange of goods resulting from this division of labor . . . . Foreign
               trade is similar to a labor-saving machine or to any other method of
               lowering the cost of production.

After observing isolationist tendencies in the less developed nations, Ropke opines, "Poor countries can afford even less than rich ones to shut themselves off from the world economy." An example: the division of labor, by means of which poorer countries can obtain and benefit from advanced technology that they cannot develop on their own, becomes a lever that operates in both directions. The less developed nations supply raw materials and labor in exchange for machinery and technology; both parties to the transaction profit.
     In today's climate of globalization, which is the inevitable result of free trade and technological progress, applying the principles of the free enterprise system to international markets is hardly novel. After all, Adam Smith had discussed the benefits of global trade nearly two hundred years earlier, in 1776 in Wealth of Nations (Chapter 12). Ropke affirms and deepens Smith's insights, an important effort for today's readers who may be overwhelmed by protectionist cant and accusations of imperialist designs, accusations that are almost invariably contrary to good sense and common experience, but which are politically convenient and effective.
     Because of the era in which he wrote, Ropke had to dislodge socialistic thinking while presenting the fundamentals of a free economy. Much of his book nevertheless still rings true in our time when state welfarism and nascent attempts at global (not just national) wealth redistribution offer trite and uniformly failed promises. As Ropke and many others observe, socialism is simply an excess of intellect over experience. For the modern reader the import of this old adage can be ignored only at one's peril, for utopian ideals are reborn with every generation. Although Ropke abbreviates his investigation of socialism for reasons of economy (socialism, he observes, had been minutely examined by too many other writers for him to iterate all its flaws), he often can't avoid enumerating some of its deficiencies in order to explain the permutations of capitalism.
In a later era, Ronald Reagan succinctly expressed capitalism's essence in 1987 when he spoke at the Berlin Wall:

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               Just as truth can flourish only when the journalist is given freedom of
               speech, so prosperity can come about only when the farmer and
               businessman enjoy economic freedom.

Ropke anticipated Reagan's insight with a penetrating question and its answer:

               Who is charged with seeing to it that the economic gears of society
               mesh properly? Nobody.

And, of course, everybody. How much more simple could it be? Adam Smith's "invisible hand" and Thomas Jefferson's admonition "that government governs best which governs least" are both at work in a free society's mostly uncontrolled economic system. Although constraints against monopoly and against deceit, dishonesty, and corruption are indispensable, an otherwise free economic system (born of a free market where the division of labor is allowed to operate unimpeded) will bring the most of the best to the greatest number of citizens. While the consumer sometimes needs protection, such defense of his well-being must begin as his own personal
responsibility. It cannot be sought exclusively in rules and regulations and legislation and judicial decisions. If individuals look to others for safety the resulting protective measures soon become prescriptions, then demands, and ultimately laws, which, of course, beget more laws because law is such an inefficient mechanism to guide human behavior. This is all to the detriment of freedoms, large and small. In spite of Benjamin Franklin's intention to address freedom in the context of government, the essence of his thoughts apply as well to ordinary economic life: "those who are willing to give up a little [economic] freedom to obtain a little [economic] security deserve neither."
     If we ask the state to make us secure in our financial lives rather than taking that responsibility upon ourselves we give up our freedom on all issues that we abandon to the decisions, whims, or desires of government functionaries. The incremental loss of freedom eventually becomes a monumental, then a tyrannical loss. In the United States, think of OSHA (Occupational Safety and Health Administration), which tells us, as though common sense does not exist, how to use a ladder ("If you climb on this device you may fall and injure yourself.")

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     Ropke sees most social engineers as oblivious to these facts. The righteous see something "wrong" and they want a remedy, usually through governmental intervention, meaning using
someone else's resources. (Just as often they are interested in achieving some political end-either their own or that of their political party.) They begin their involvement with the problem some distance from its genesis. Ropke surmises that if they were to trace any given situation to its origin they would see that it is likely amenable to alleviation through private initiatives and at the local level where solutions can be tailored to specific circumstances and defined populations.
     In pursuing the ill and its resolution via government action the social engineers will be faced with the challenge of structuring the solution so it actually achieves the desired effect to discourage the problem's persistence or recurrence. But the government's action will also have to take into account the strong possibility of unintended consequences from this new action that may unwittingly create further ills. Of course, the initial ill very likely was an unintended consequence of some previous government action. In the end, if those who see government as the solution to anything were to delve to a problem's roots they might humbly question whether the social benefit to be achieved by governmental intervention would not be outweighed by damage done to other parts of society. Structurally, government intervention (again, made possible only through taxation) universally discourages the creation of wealth and employment that in all likelihood could and would solve the problem privately if left to its own devices. Ropke raises these relevant questions as part of his study of the totality of economic, cultural, and governmental relationships so that some type of practical analysis can be brought to real-world problems.
     In Ropke's hands, the topic of monopolistic practices (the alleged existence of which is the subject of ever-present assertions of the need for governmental intervention) seems less complex than it might. The biggest threat to the market is not private monopoly but government monopoly-almost no private monopolies exist except those that are founded in and granted by action of the state. Ropke finds the recommendations of some who wish to preclude potential capitalistic monopolies (by means of more government regulations and control) even more bizarre than the reasons given as to why the private tendency toward monopoly is so supposedly dangerous in the first place. In point of fact, monopolies don't tend to persist in a free market. As soon as someone attempts to establish a monopoly,

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citizen out of a taxpayer. Without the knowledge and experience offered in Ropke's full but simplified analysis, people often remain victims of government, and politicians, rather than masters.
     In his overview, Ropke steps back to look at the then-ongoing war between capitalism and collectivism/socialism. He acknowledges that he didn't take socialism to task in a thorough manner, because this collectivist aberration was widely recognized as a failed philosophy, defensive of an insupportable economic structure. He concludes that

               these degenerate aspects [the arguments in favor of socialism] are so
               obvious to everybody, they are the subject of such an extensive and
               overly emotional literature, that it is the duty of the scholar to emphasize
               the other side of the picture and to lead the discussion back to an
               understanding of the foundations of our economic system.

     If one is interested in the details, goals, and methods of socialism, Ludwig von Mises's Socialism (Chapter 32) is probably the most comprehensive (and understandable) critique of the scores and scores of books on the character of socialist philosophy. Mises wrote Socialism in 1922, yet the manner in which he covers the entire subject remains as alive and valid today as it was then. As has been previously observed, the reader needs to be versed in these matters because in the current era socialist thinking is the impetus behind the welfare state. The mechanics are somewhat different (and only somewhat) but the goal and the effect are not. The bankrupt logic of the welfare state is nothing but the same heedless understandings of socialism repackaged for the twenty-first century. A volume that meshes well with those of both Ropke and Mises is Richard Pipes's Property and Freedom (Chapter 11). Pipes's work provides an understanding of the necessary conjunction between the substance of capitalism (which is property) and freedom-the essence of the human experience.
     Ropke evinces a belief that if people simply understood capitalism better they would reject socialism, and by inference the welfarism so popular with generous and self-serving politicians. We daily witness the undeniable harm done by a culture of dependency, by "entitlements," by the ubiquitous attitude that nothing that goes wrong is our fault, and by the quasi-religious faith that a lot more government will fix almost anything. Demagoguery along these lines-that the wealthy,

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               The first duty of an economist [or a citizen] . . . is to establish an exact
               understanding of two things: the economic system which we have and
               the one which we would establish in its place . . . [so] we will have a
               full awareness of all that we would give up, and all that we would
               receive, in choosing the one or the other.

After exhorting both the teachers and the students to learn, to expel ignorance, Ropke notes a serious difficulty:

               It is, indeed, disquieting to find how small a minority in any country
               really understands the essence of our economic system. . . . That the
               number is so small is in itself a cause for concern, since the overwhelming
               majority of those who

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              are engaged in passing random judgments on our economic system seek
              disparage the minority who do understand it as ignorant and biased-a 
              spectacle to be met with in no other science.
                                                                                                        [Emphasis added]

The italicized clause speaks to a continuing problem manifest in the growing divisiveness when public debate regarding economic issues ensues. Specifically, the "passing random judgments" thought applies to two groups of people. The first group encompasses various activists, pundits, "experts" (whether or not they actually are), editorialists, broadcast news readers, and politicians-all of whom are often guilty, to one degree or another, of passing economic fallacy off as gospel. Some do this out of ignorance, some for ignoble reasons.
     In the second group appear the victims, the often-duped voters who respond to the economic representations advanced by members of the first group that may or may not have any validity. The second group's economic ignorance is obviously the major contributing factor to the efficacy of the first group's designs, for economic ignorance allows demagoguery to flourish. The often fanatic speakers frequently pontificate in naive terms of justice and fairness, neither of which is as easily achieved or as black and white as the lecturer would have us believe. Too many of us allow ourselves to be led, almost to the exclusion of making our own decisions, because we don't take the time to understand economic fundamentals. Without that understanding, we can do little but accept the judgments visited upon us. At the most basic level this is often abetted by the repetition of false premises. As Vladimir Lenin, leader of the 1917 Russian Revolution observed "A lie repeated often enough becomes the truth." Thus is the circle closed.
     While Ropke covers the essentials of free enterprise in a reasonably comprehensive manner, he intentionally leaves some gaps so as not to confuse the subject with too many details. The interested reader may complete an investigation of free market economics by reading Ludwig von Mises's The Theory of Money and Credit (Chapter 34). Although Mises's title sounds daunting, his prose is clear and expressive. His book remains surprisingly useful despite the fact that it was written almost a century ago.
     Ropke's readers should be aware that he uses the words liberal and collectivist in their traditional European meanings as he juxtaposes his views and understandings in relation to various economic configurations. His is one of those books written by early twentieth-century

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European authors that uses the word liberal in the same sense that conservative or classical liberal is used in the U.S. today. Ropke's use of "collectivist" generally corresponds to "socialist" in modern parlance.

About the Author
Born in Hanover, Germany at the very end of the nineteenth century, Wilhelm Ropke-the man and the philosopher-was a product of twentieth-century excesses. The son of a physician, his upbringing was grounded in traditional Protestant teachings whose influence on his thinking appears over and over in his work. He fought as a soldier in the trenches during World War I; as a result of that brutal experience he sought to understand the causes of such devastating conflicts, thus he pursued the study of economics and sociology. (To understand how the same circumstances could lead to a completely opposite personal course that also had profound public consequences, see Witness [Chapter 41] by Whittaker Chambers, a contemporary of Ropke.) Upon receiving his doctorate Ropke became a professor in Germany.
     Ropke's reputation as an individualist thinker was well earned. He was not afraid to look at first causes; his ability and drive to do so marked his career and works. He taught in Germany until he was forced to leave the country in 1932 because of his outspoken opposition to Nazism. He resided in Istanbul and taught at the university there from 1932 until 1937. He then returned to Europe and began a career at the Institute of International Studies in Geneva, Switzerland, where he embarked on a collaborative professional life with Ludwig von Mises. Although von Mises emigrated early in World War II, Ropke remained in Geneva throughout the Second World War and for the rest of his academic life.
     Ropke, along with von Mises, Frederich von Hayek, Milton Friedman, and others who were ultimately awarded Nobel Prizes in economics, formed the Mont Pelerin Society in Switzerland in 1947. Their intent was to publicize the folly of collectivism and to decry socialist ideology and its increasing erosions of liberty. The philosophy of the Mont Pelerin Society succeeded in spite of the fears of its founders and exceeded even the most optimistic of its members' expectations. Ropke married in 1924 and raised three children with his wife, Eva. He died in 1966.